FG Cuts Oil Block Entry Costs to $3 Million
The Federal Government has reduced the signature bonus for oil blocks in Nigeria’s 2025 licensing round from $10 million to between $3 million and $7 million. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirmed the update on its website, describing the move as part of efforts to lower entry barriers for investors.
“The Nigerian government has graciously reduced the signature bonus to between $3 million and $7 million. All bidders must submit bids within this range, as approved by the Minister of Petroleum,” the commission stated.
Previously, the government cut the signature bonus from about $200 million to $10 million in 2024. NUPRC CEO Gbenga Komolafe said the reduction was guided by surveys of other oil-producing countries, such as Brazil, to make Nigeria’s blocks more competitive.
A signature bonus is a non-refundable payment made by a contractor to the government when signing an oil or gas agreement. The bonus cannot be paid in naira and must be deposited in a United States dollar-denominated account.
Under the 2025 licensing round, winners will receive a Petroleum Prospecting Licence (PPL), granting the exclusive right to drill exploration and appraisal wells, conduct petroleum exploration operations, and dispose of crude oil or natural gas extracted during production tests.
The PPL will have an initial duration of three years, extendable by another three years for onshore and shallow water blocks, and five years for deepwater and frontier blocks.
NUPRC will use a two-stage bidding process for the award of blocks, comprising a qualification stage and a bid stage. Only applicants who pass the qualification stage and sign a Confidentiality Agreement will be allowed to submit technical and commercial bids.
Each bidder may apply for a maximum of two assets across all applications, including consortium participation. Multiple interests held in different consortiums by a single company will count as a single application.
The 2025 licensing round features 50 blocks across onshore, shallow water, and deep offshore areas, including PPL 2A29 to PPL 2A62, PPL 2010, PPL 307 to PPL 309, PPL 700 to PPL 703, and PPL 800 to PPL 803.
The reduction in entry costs aims to encourage more investment in Nigeria’s oil sector and improve competitiveness in the global energy market.
